CDSL shares hit fresh record high, rally 87% in two months

CDSL continued to gain BO account market share from NSDL in the June quarter

Shares of Central Depository Services (India) (CDSL) hit an all-time high of Rs 514 on the National Stock Exchange (NSE) on Thursday after the stock rallied 6 per cent on expectation of improved earnings. In the past two trading days, the stock has zoomed 18 per cent on the back of heavy volumes.

In the past two months, the stock has soared 87 per cent from the level of Rs 275 on the back of strong June quarter earnings. CDSL’s consolidated net profit jumped 67 per cent year-on-year (YoY) at Rs 46.72 crore in April-June quarter (Q1FY21), on the back of steady operational revenue and higher other income. 

Revenue grew 11.75 per cent YoY at Rs 65.26 crore, other income up 38 per cent at Rs 20.74 crore over the previous year quarter. Adjusted for one-offs last quarter, EBIT (earnings before interest tax) margin was up 186bps to 54.5 per cent.

“CDSL delivered a robust performance both on the revenue and margins front, driven by traction in transaction charges (32 per cent of revenue, +59.2 per cent QoQ). The transaction charges surged due to high retail activity, an increase in delivery volume, and strong addition of new accounts. The COVID-19 impact was felt on KYC revenue (April and May-20) and the addition of unlisted companies,” analysts at HDFC Securities said in results update.

CDSL continued to gain BO account market share from NSDL (stood at 53.7 per cent in June-20 vs. 48.4 per cent in FY19). Its incremental market share stood at 85 per cent due to exclusive arrangements with discount brokers. BO accounts are the building blocks for a depository and have a high correlation to revenue growth. SEBI allowed Aadhaar-based e-KYC for account opening, which will boost KYC volumes, the brokerage firm said. However, the stock is trading above target price of Rs 412 per share.